Securities and Futures Advisory Services Agreement
This Agreement for Securities and Futures Advisory Services is made on [Date] at Lahore
BY AND BETWEEN
Client: (hereinafter referred to as "Client" or "Investor")
AND
Company: ARN Financial Advisors (Private) Limited, a company incorporated under the laws of Pakistan and licensed to provide Securities and Futures Advisory Services, having its registered office at 502 5th Floor, South Tower, Khayaban-e-Aiwan-e-Iqbal Road, Lahore, Pakistan (hereinafter referred to as the "Investment Advisor/Company")
WHEREAS
- The Client is an investor, interested in investment in securities and/or future contracts and wishes to avail advisory services of the Company.
- The Investment Advisor is engaged in the business of Securities and Futures Advisory Services and is duly licensed by the Securities & Exchange Commission of Pakistan (SECP) to provide its services to clients/investors and has agreed to provide advisory services to the Client.
NOW THEREFORE the Client and the Company have agreed on the following terms and conditions.
1. Appointment as Advisor
1.1 The Client, in accordance with the applicable law, hereby appoints the Company as his/her/its Investment Advisor, entirely at the risk of the Client.
1.2 The Client agrees that in consideration of the services provided by the Company, the Client shall, as and when demanded, pay to the Company an advisory fee/charges in terms of Clause 6 below.
2. Services
2.1 The Company shall provide investment advisory services to the Client based on research and fundamental & technical analysis of the securities on a best effort basis. The Services under this Agreement shall be limited to professional advice, provided after risk assessment procedure including risk aversion and risk capacity, with respect to securities and future contracts trading activity to be undertaken by the Client.
2.2 In order to guide and advise the Client, the Company shall provide reports on current and potential investments and opportunities to the Client.
2.3 The Services shall not in any way include or be deemed to be entering into or making trading transactions on behalf of the Client. Nor shall the Company act as securities broker for the Client. All trading activities by the Client shall be the sole responsibility of the Client, through his/her/its broker, selected by the Client.
2.4 The Services shall be limited only to professional advice and shall not be binding on the Client, and the Client shall be free to follow the advice of the Company or act otherwise.
2.5 The advice given by the Company in terms of this Agreement shall in no way be taken, expressly or impliedly, as an assurance of any minimum, targeted or guaranteed returns on the investment made by the Client in pursuance of the advice. The Client understands that investment in securities and future contracts is a risk-bearing activity and no returns, whatsoever, can be guaranteed, nor does the Company assert or claim to offer any guaranteed returns to the Client.
2.6 The portfolio or companies advised to an individual can be different from what is advised to any other member or package offered by the Advisor to the client.
3. Scope of Services
In general, pursuant to introductory meeting and risk assessment of the Client, the Company shall provide the following services to the Client:
3.1 Investment advice on whether, which, the time at which, or the terms or conditions on which securities may be bought, sold, exchanged, or subscribed for.
3.2 Issue analyses or reports, for the purposes of facilitating the Client to make decisions on whether, or the time at which, or the terms or conditions on which, specific securities may be bought, sold, exchanged, or subscribed for.
3.3 Investment advice on whether, which, the time at which, or the terms or conditions on which, futures contracts are to be entered.
3.4 Issue analysis or reports, for the purposes of facilitating the recipients of the analysis or reports to make decisions on whether, which, the time at which, or the terms or conditions on which, futures contracts are to be entered.
3.5 Review and prioritise goals and objectives for the Client in accordance with his/her/its risk profile.
3.6 Review the current investment portfolio of the Client and develop an asset/investment management strategy.
3.7 Need-based consultations for twelve months from the date the initial agreement is signed.
4. Limitation of Company Liability
4.1 The Company shall not be responsible for any loss which a client may suffer by reason of any depletion in the value of the assets (securities and/or future contracts) under advice in the following conditions:
a) Fluctuation in asset value; b) Non-performance or under-performance of the securities/future contracts; or c) Overall market conditions due to any internal or external factors affecting the performance of the securities and futures market.
4.2 Any advice given to the Client shall in no way be treated as accounting, legal, or tax advice. The Client shall personally be liable for any advice required for the purpose of accounting, legal or regulatory compliance or tax, and shall seek such advice at his/her/its own cost from the relevant experts.
5. Definition of Securities and Future Contracts
5.1 For the purposes of this Agreement, "Securities," in the case of a listed instrument, includes:
a) Shares and stock of a company (shares); b) Any instrument creating or acknowledging indebtedness which is issued or proposed to be issued by a company including, in particular, debentures, debenture stock, loan stock, bonds, notes, commercial paper, sukuk or any other debt securities of a company, whether constituting a charge on the assets of the company or not (debt securities); c) Loan stock, bonds, sukuk and other instruments creating or acknowledging indebtedness by or on behalf of a government, central bank or public authority (Government and public debt securities); d) Modaraba certificates, participation term certificates and term finance certificates; e) Any right (whether conferred by warrant or otherwise) to subscribe for shares or debt securities (warrants); f) Any option to acquire or dispose of any other security (options); g) Units in a collective investment scheme, including units in or securities of a trust fund (whether open-ended or closed-end); h) The rights under any depository receipt in respect of shares, debt securities and warrants (custodian receipts); and i) Any other instrument notified by the Securities and Exchange Commission of Pakistan to be securities for the purposes of the Securities Act 2015.
5.2 For the purposes of this Agreement, "Futures Contract" shall mean:
a) An arrangement where one party agrees to enter into a contract to deliver a specified quantity of a specified commodity or securities or financial instruments to another party at a specified future time and at a specified price payable at that time; or
b) Where the parties agree to discharge their obligations under the contract by settling the difference between the value of a specified quantity of a specified commodity or securities or financial instruments agreed at the time of the making of the contract and at a specified future time; or
c) Such other futures contract or class of futures contracts or derivative contracts as prescribed under paragraph (a), (b) or (c).
6. Advisory Fees
6.1 For the Services to be provided by the Company under this Agreement, the Client shall be liable to pay advisory fee to the Company.
a) The Company shall charge the Client on a subscription package basis.
6.2 The Client shall make payment through banking channels. For online bank transfer, the Client shall transfer the payable amount to the Company's bank account with the following details:
ARN FINANCIAL ADVISORS PRIVATE LIMITED
Bank Name: Faysal Bank, IBB Binoria SITE, Karachi
Account No: 3078 3010 0000 4797
IBAN: PK93 FAYS 3078 3010 0000 4797
7. Responsibilities of the Client
In order to avail Services of the Company under this Agreement, the Client shall:
a) Provide complete, accurate and up-to-date information and documents required for KYC/CDD, risk profiling, investment objectives, financial circumstances, investment experience and risk tolerance.
b) Promptly notify the Company of any material change in financial circumstances, investment objectives, risk tolerance, contact details or other relevant information.
c) Provide all documents, declarations and information reasonably required by the Company for regulatory, compliance and advisory purposes.
d) Ensure that all information provided to the Company is true, complete and not misleading.
e) Disclose relevant financial commitments, liabilities, income, existing investments and other information necessary for assessing suitability.
f) Review and understand the investment advice, recommendations, disclosures, terms and associated risks before making any investment decision.
g) Acknowledge that the final investment decision remains with the Client and that investments are subject to market and other risks.
h) Understand that investment values and returns may be affected by market conditions, interest rates, inflation, credit, liquidity, economic and other relevant risks.
i) Ensure that funds used for investment are from lawful and legitimate sources and provide supporting information where required.
j) Comply with applicable laws, regulations and requirements relating to the Client's investments.
k) Pay all applicable advisory fees, charges, taxes and other costs in accordance with the Agreement.
l) Promptly report any unauthorized transaction, discrepancy, complaint or material issue relating to the Client's account or advisory services.
m) Acknowledge that past performance is not indicative of future results and that the Company does not guarantee any particular return or preservation of capital, except as permitted by applicable law.
8. Understanding of Risk Factors
8.1 The Client understands and agrees that investing in stocks and future contracts comes with risks. These risks include unexpected changes in the market, finances, politics, and the economy, both globally and locally. These changes can cause the value of investments to go up and down, and they may happen without warning, even when investment advice is being provided by professionals.
8.2 The Client understands that the securities market is full of risk and is not suitable for an investor who has a low-risk profile. The Client confirms that he/she/it has carefully read the Risk Profiling Form (Annexure-A). Risk factors associated with Equity Investments include, but are not limited to, the following:
a) Market Risk: The value of stocks can fluctuate due to changes in market conditions, such as economic downturns, interest rate movements, or geopolitical events. These fluctuations can affect the overall value of the investment portfolio.
b) Company-Specific Risk: Individual companies may face challenges such as poor management decisions, legal issues, or changes in industry trends that can adversely impact their stock prices. Investing in a single company increases the risk of losses if that company underperforms.
c) Business Risk: This risk concerns the viability of a business, meaning its ability to earn more than it spends, thereby making profits.
d) Liquidity Risk: Some stocks may have lower trading volumes, making it difficult to buy or sell them at desired prices. This lack of liquidity can result in delays or unfavorable pricing when trying to execute trades.
e) Volatility Risk: Equity markets can experience rapid price fluctuations over short periods, leading to higher volatility. While volatility can present opportunities for gains, it also increases the likelihood of losses if prices move against the investor's positions.
f) Sectoral Risk: Investing heavily in specific sectors or industries exposes the portfolio to sectoral risks. Factors such as changes in consumer preferences, regulatory developments, or technological advancements can impact certain sectors more than others.
g) Currency Risk: For investments in foreign stocks, fluctuations in currency exchange rates can affect the returns when converting profits or dividends back into the investor's home currency. Currency movements can amplify gains or losses from equity investments.
h) Political and Regulatory Risk: Changes in government policies, regulations, or geopolitical tensions can influence stock prices and market sentiment. Uncertainty surrounding political events or regulatory decisions may lead to increased volatility.
i) Interest Rate Risk: Equity prices can be influenced by changes in interest rates, particularly for sectors sensitive to borrowing costs, such as financial services. Rising interest rates can increase borrowing expenses for companies and impact their profitability, affecting stock prices.
j) Credit Risk: Companies that issue stocks may also have debt obligations. If a company's creditworthiness deteriorates or it defaults on its debt, it can negatively impact its stock price and shareholder value.
k) Inflation Risk: Inflation erodes the purchasing power of money over time, potentially reducing the real returns on equity investments. Companies may struggle to maintain profitability or pass on increased costs to consumers during periods of high inflation.
Understanding and managing these risks is crucial for investors to make informed decisions and build diversified portfolios that align with their investment objectives and risk tolerance.
9. Confidentiality and Use of Information
9.1 The Company shall keep all information provided by the Client confidential, unless the information provided is already publicly available. The Company shall not share any of the Client's information with any third party unless required by law. The Company shall promptly inform the Client about any direction/request given to the Company regarding the Client's information, to enable him/her/it to prevent such disclosure by the Company. However, the Company shall not be liable for any disclosure mandated by law.
9.2 The Client understands that the information shared and advice rendered by the Company is for the personal use of the Client and may not be used for any other purpose, including commercial use.
9.3 The Company shall not be responsible for any loss to any third party arising out of a breach of Clause 9.1 above, and he/she/it shall hold the Company harmless and indemnify against any monetary or other claims, and shall also indemnify the Company for any reputational loss caused to the Company due to breach of the preceding clause.
10. Termination & Refund
10.1 This Agreement shall commence from the date of execution and remain valid for twelve (12) months, unless terminated earlier in accordance with this Agreement or applicable SECP laws and regulations.
10.2 The Parties may renew this Agreement by mutual written consent, subject to applicable regulatory requirements.
10.3 Either Party may terminate this Agreement by giving ninety (90) days' prior written notice. Where termination is by the Advisor, other than due to the Client's breach or misconduct, the unearned portion of any advance Advisory Fee shall be refunded on a pro-rata basis.
10.4 In case of termination by the Client for convenience, the fee lawfully earned for services already provided shall not be refundable; however, any unearned advance fee shall be refunded where required under applicable SECP laws and regulations.
10.5 This Agreement shall automatically terminate if the Advisor's required SECP licence is not renewed, suspended, cancelled or otherwise ceases to remain valid. Any unearned advance Advisory Fee shall be refunded to the Client on a pro-rata basis.
10.6 If the Advisor suspends or discontinues the Advisory Services for reasons attributable to the Advisor, any unearned advance fee shall be refunded on a pro-rata basis.
10.7 In case of the Client's material breach, fraud, misrepresentation, provision of materially inaccurate information or violation of applicable law, the Advisor may terminate the Agreement. Fees shall be retained only to the extent lawfully earned or permitted under applicable law.
10.8 The Client shall maintain confidentiality of the Advisor's proprietary and non-public information, research and recommendations, and shall not disclose the same to unauthorized third parties, except where required by law or a regulatory authority. Any material breach may constitute grounds for termination, subject to applicable law.
10.9 The Client warrants that all information provided in the KYC, Risk Profile and this Agreement is true, complete and accurate. The Client shall promptly notify the Advisor of any material change. The Advisor shall not be responsible for advice affected by materially inaccurate or misleading information provided by the Client, subject to applicable law.
10.10 Any refund shall be calculated on the basis of the unearned portion of the advance Advisory Fee and processed within the period prescribed by applicable law or, where no period is prescribed, within a reasonable period.
10.11 Nothing in this Agreement shall restrict any statutory, regulatory or contractual right or remedy available to the Client under applicable SECP laws, rules, regulations, circulars or directions.
11. Relationship with Related Parties
11.1 The Company declares that it shall provide all its services in utmost good faith and professional diligence and without any conflicting interests.
11.2 The Company does not derive any direct or indirect benefit from the assets of the Client or have any conflict of interest. In case there are any conflicting interests that may prevent it from providing unbiased advice, the Company shall inform the Client.
11.3 The Company shall disclose to the Client any actual or potential conflicts of interest that may arise from any connection to or association with any issuer of securities, including any material information or facts that might compromise its objectivity or independence in carrying on securities or futures advisory services.
11.4 The Company shall be under a duty to disclose any interest or holding of any position in the securities, futures contracts or portfolio of securities that may be the subject matter of advice to the Client.
11.5 The Company shall ensure that its advisory activities are clearly segregated from all its other activities, provided the Company is engaged in activities other than advisory services.
11.6 The Company must at all times take reasonable steps to ensure that neither the Company nor any of its employees, where applicable, offers or gives, or solicits or accepts, any inducement that is likely to conflict with any duties owed to the Client.
11.7 The Company shall take all necessary steps to ensure that the Client's interests are kept at the forefront and protected.
11.8 The Company shall obtain all necessary consents and permissions from the Client prior to taking any actions in relation to the securities or investment products advised by the Company.
11.9 The Company shall not seek any power of attorney or authorisations from the Client for implementation of its investment advice.
12. Selection of Securities Broker
The selection of Securities Broker is not in the scope of this Agreement. The Company shall not advise the Client on the selection of a Securities Broker. The Client shall be solely responsible for the selection of a Securities Broker of his/her/its own choice. The brokerage commission, taxes and other expenses related to the sale and purchase transactions of securities and custody charges of securities shall be fully borne by the Client and shall not be the subject of this Agreement in any manner whatsoever.
13. Death or Disability of Client
13.1 In case of death or other disability leaving the Client incapable of exercising his/her/its rights and fulfilling obligations under this Agreement, the Company shall contact the person(s) nominated in advance by the Client and proceed in accordance with law.
13.2 The Company shall not be obligated to follow instructions from any person other than the Client, or any person duly authorized and intimated to the Company.
14. Grievance Redressal
14.1 In case of any complaint or grievance related to Service under this Agreement, the Client may write to the Company at complaints@arnfinancials.com or send to the postal address. The Company shall endeavour to provide a response on a prompt basis, but no later than 10 working days.
14.2 Any dispute, controversy or claim arising out of or in connection with this Agreement, including its formation or breach, shall first be attempted to be settled amicably. If unresolved within 30 days, it can be taken up with SECP.
15. Assignment
The rights of the Parties under this Agreement are private to the parties and may not be assigned by either party without the consent of the other party. However, in case of any change in ownership, merger, acquisition or amalgamation of the Company, the relationship created under this Agreement shall continue and the obligations of the Company shall transfer to its successor(s).
16. Severability
If any provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision will be deemed to be written, construed, and enforced as so limited.
17. Ownership of Intellectual Property
17.1 All intellectual property and related material, including any copyrights, related rights, trade secrets, moral rights, goodwill, relevant registrations or applications for registration, and rights in any patent, trademark, trade dress, designs and trade name (the "Intellectual Property") that is developed, produced or shared by the Company, will be the sole property of the Company.
17.2 The Client may not use the Intellectual Property for any purpose other than that contracted for in this Agreement, except with the written consent of the Company.
18. Modification of the Agreement
Any amendment or modification of this Agreement, or additional obligation assumed by either Party in connection with this Agreement, will only be binding if evidenced in writing signed by each Party or an authorized representative of each Party.
19. Force Majeure
The Company shall not be liable for delays or errors occurring in providing the Services due to circumstances beyond its control, including but not limited to acts of civil or military authority, national emergencies, work stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot or failure of communication or power supply. In the event of equipment breakdowns beyond control, the Company shall take reasonable steps to minimise service interruptions, but it shall have no liability with respect thereto.
20. Waiver
The waiver by either Party of a breach, default, delay or omission of any of the provisions of this Agreement by the other Party will not be construed as a waiver of any subsequent breach of the same or other provisions.
21. Direct Channel Communication
Only advice delivered via official company communication channels such as official emails, official WhatsApp or the company's members portal on the website shall be deemed as official advice under this agreement. Any verbal discussion, casual text message or informal consultation shall not constitute binding advice.
22. Governing Law
This Agreement shall be governed by and construed in accordance with the Laws of the Islamic Republic of Pakistan, and the courts at Lahore shall have exclusive jurisdiction in any matter related to this Agreement.
23. Contact Details for Notices
Name: Abdul Rehman Najam
Email: abdulnajam5@gmail.com
Phone: +92 303 0027875
